T-84/96

CIPEKE ν COMMISSION

JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber) 7 November 1997 *

In Case T-84/96,

Lda,, a company incorporated according Cipeke — Comércio e Indùstria de Papel Lda to Portuguese law, established in Lisbon, represented by Miguel Ferrão Castelo Branco, then by João Caniço Gomes, both of the Lisbon Bar, with an address for service in Luxembourg at the Chambers of François Brouxel, 6 Rue Zithe,

applicant,

ν

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber),

composed of: B. Vesterdorf, President, C. P. Briët and A. Potocki, Judges,

Registrar: B. Pastor, Principal Administrator,

having regard to the written procedure and further to the hearing on 26 September 1997,

gives the following

Judgment

3 Article 5(4) provides that final payment claims are to contain a detailed report on the content, results and financial aspects of the relevant operation. The Member State is to certify the factual and accounting accuracy of the statements contained in the payment claims.

4 Article 6(1) of the Regulation provides that, when assistance from the European Social Fund (hereinafter 'the Fund') is not used in conformity with the conditions set out in the decision of approval, the Commission may suspend, reduce or with­ draw the aid after having given the relevant Member State an opportunity to com­ ment.

5 Finally, Article 7(1) of the Regulation allows the Commission to conduct on-the- spot checks, without prejudice to checks carried out by the Member States.

Facts underlying the dispute

6 Cipeke — Comércio e Indùstria de Papel Lda, which carries on business in the paper trade and industry and in the graphic arts sector, entered into, jointly with a group of undertakings from the sector, a contract with a promoter, Partex Com­ panhia Portuguesa de Serviços SA (hereinafter 'Partex'), for the organization of a joint training programme during the 1987 financial year.

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12 Upon application by the applicant the Court annulled that decision on the basis that the statement of reasons given was inadequate (Case C-l 89/90 Cipeke v Com- mission [1992] ECR 1-3573, paragraphs 21 to 23). It considered that, although the applicant was in fact informed of the total amount of the reduction, it was unaware of the exact list of items or headings concerned, and of the itemization and method of calculation of that reduction.

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CIPEKE ν COMMISSION

13 In compliance with that judgment, the Commission initiated a procedure with a view to adopting a fresh decision in regard to the applicant. To that end, a Com­ munity verification mission was carried out on the applicant's premises on 7 July 1993.

1 4 By letter No 6045 of 24 March 1994, the Commission informed DAFSE that re-examination of Cipeke's final payment claim had shown that a part of the Fund assistance had not been used in conformity with the conditions laid down in the approval decision.

15 In that letter the Commission essentially noted that Cipeke had entrusted the training programmes to several subcontractors who had invoiced for certain ser­ vices. In the Commission's view, the verification mission had established, on the basis of information provided by the promoter's main representative, that the intermediary role performed by the promoter had been of no use whatever and had resulted in an unjustified increase in expenditure declared.

20 By Decision PT-C(95)543 of 12 December 1995 the Commission reduced the Fund assistance and ordered reimbursement in the amount of ESC 4 267 218.

21 DAFSE informed the applicant of that decision and, by letter of 21 March 1996 received by the applicant on 23 March 1996, requested it to reimburse that amount to the Fund.

Procedure

22 In those circumstances, by application lodged at the Registry of the Court of First Instance on 29 May 1996, the applicant brought an action for the annulment of the decision to reduce assistance.

23 By separate document lodged at the Registry on the same date, the applicant sought suspension of the operation of the contested decision, pursuant to Article 185 of the EC Treaty. By order of 8 October 1996 (Case T-84/96 R Cipeke v Com- mission [1996] ECR 11-1315), the President of the Court of First Instance rejected that application for interim measures and ordered that costs be reserved.

24 Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Third Chamber) decided to open the oral procedure without any preparatory inquiry.

(1) declare the applicant's claim unfounded, because it is unproven, and dismiss it;

(2) order the applicant to pay the costs.

Subject-matter of the dispute

28 The conclusions set out in the application contain the following statement:

'Under those conditions the contested measure infringed essential procedural requirements (Article 190 of the EC Treaty), entailing its nullity which is here pleaded and should be ordered, with the result that the measure may produce no effects (Article 173 of the EC Treaty).'

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32 The lack of precision in the applicant's statement of claim led the Commission to believe that the only plea raised in the application was that based on the alleged inadequacy of the reasoning underlying the contested decision, with the result that it replied only to this plea in its statement in defence. Thus, at point 13 of that document, it argued that the fact that the applicant does not agree with the con­ tested decision must not be confused with the lack or inadequacy of the statement of reasons.

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CIPEKE COMMISSION

33 The Court cannot take cognizance of the observations made by the applicant in its letter of 26 April 1994 on the draft decision to reduce assistance and to which it refers at point 42 of its application. A catch-all reference to other documents, even ones appended to the application, cannot remedy the omission of essential ele­ ments of the legal arguments which must be contained in the application itself (Case C-347/88 Commission ν Greece [1990] ECR 1-4747, paragraph 28, and Case C-52/90 Commission ν Denmark [1992] ECR 1-2187, paragraph 17 et seq.).

34 Certainly, the body of the application may be supported and supplemented, in regard to specific points, by references to extracts of documents appended thereto, but it is not for the Court to seek and identify in the annexes the grounds on which it may consider the action to be based, since the annexes have a purely evi­ dential and instrumental function (orders of 24 March 1993 in Case T-72/92 Ben- zler ν Commission [1993] ECR 11-347, paragraph 19, and in De Hoe ν Commis­ sion, cited above, paragraph 22).

Statement of reasons for the decision

Arguments of the parties

39 In its application the applicant maintains that the conclusions set out in letter No 6045, which constitute the grounds of the contested decision, are contradictory, ambiguous, incoherent and without foundation. They give, it claims, no objective and precise indication of the manner in which the amount of ineligible expenditure was calculated. To that extent, the contested decision does not comply with the requirements laid down by the Court of Justice in Cipeke ν Commission, cited above.

40 The Commission, it maintains, based its conclusions on hypothetical calculations which, in view of the expenditure in connection with the preparation of the courses, result in much smaller figures than the average expenditure incurred by all the other recipients of the assistance at issue. The Commission's calculations as to the ineligibility of certain expenditure were not carried out in a reasonable manner, as the applicant already had occasion to emphasize in its letter of 26 April 1994 annexed to the application, of which it forms an integral part.

41 In its reply, the applicant adds that the contested decision states neither the method of calculation nor the rules followed by the Commission in reducing the financial

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Findings of the Court

46 It should be recalled at the outset that the Court has consistently held that the statement of reasons required by Article 190 of the Treaty must clearly and unequivocally show the reasoning of the institution which adopted the measure, so as to enable the Community judicature to exercise its power of review and the persons concerned to know the grounds on which the measure was adopted (Case C-22/94 The Irish Farmers Association and Others [1997] ECR 1-1809, paragraph 39, and Lisrestal, cited above, paragraph 52).

47 It follows that the absence or inadequacy of a statement of reasons constitutes a plea going to infringement of essential procedural requirements and, as such, is distinct from a plea going to the incorrectness of the grounds of the contested decision, which, by contrast, is reviewed in the context of the question whether a decision is well founded (Case T-356/94 Vecchi ν Commission [1996] ECR-SC 11-1251, paragraph 82).

48 In the present case, suffice it to state that the contested decision, as explained in letter No 6045, devotes several pages to a detailed account of the grounds relied on, rightly or wrongly, by the Commission in support of the reduction of the vari­ ous headings of expenditure deemed ineligible and of the methods for calculating those reductions. The applicant was therefore able to apprise itself of both the total amount of the reduction and the headings in question, the itemization of the reductions in the case of each heading and the method of calculation applied to those reductions, in accordance with the principles laid down in Cipeke ν Com­ mission, cited above.

52 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the applicant has been unsuccessful and the Commission asked for an order as to costs against the applicant, it must be ordered to pay the costs, including the costs of the proceedings on the application for interim measures.

On those grounds,

THE COURT OF FIRST INSTANCE (Third Chamber),

hereby:

action;; 1. Dismisses the action

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